Wall Street follows FTSE 100 and European bourses lower amid worries about the
health of the Portuguese financial system and other peripheral eurozone
nations

Growing fears about Portugal sent global stock markets into a tailspin, with London's FTSE 100 dropping and stocks across the eurozone and US sliding amid mounting worries about the Iberian nation's financial system.

The British blue-chip index lost 59 points, or 0.9pc, to 6,659 - its fourth straight day of falls - while Lisbon's PSI 20 index slumped 4.3pc.

Investor concerns are centred on Portugal and the health of Espirito Santo Financial Group (ESFG) and Banco Espirito Santo (BES), the country's biggest-listed lender which has an investment banking business in London. Portugal Telecom, which has bought debt in ESFG, has also been hit by investor jitters.

"Banco Espirito Santo is the most important event right now impacting European equities," said Peter Garnry, head of equity strategy at Saxo Bank.

"Investors are dumping the shares and bonds of the Portuguese lender on the news that its parent company Espirito Santo Financial Group SA has missed a debt payment.

"The local central bank is assuring investors that BES is shielded from the parent company credit. The event has hit European financials like a torpedo and has revived investors darkest nightmares about Europe.”

The problems at Espirito Santo have sparked wider concerns about the stability of the eurozone periphery, and markets in Italy, Spain and Greece were all sharply lower.

The Dax in Germany and France's CAC 40 were also both down 1.5pc in early afternoon trade.

The jitters also spread across the Atlantic to the US, where the Dow Jones Industrial Average fell 140 points to 16,845 - a 0.8pc slide - in early deals.